Context:

• The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act represents the most significant reform of India’s nuclear sector since the Atomic Energy Act, 1962.
• It marks a decisive shift from a state monopoly to a regulated, licence-based framework enabling private and foreign participation.
• It is crucial for achieving India’s climate commitments (Net Zero 2070), energy security, and technological self-reliance, especially in Small Modular Reactors (SMRs).

Key Features of the SHANTI Act:

• End of State monopoly: It opens civil nuclear power generation to private sector participation, introduces a licence-based regime for nuclear activities, and aims to attract long-term domestic and foreign capital.
• Independent nuclear regulation: It grants statutory backing to the Atomic Energy Regulatory Board (AERB). Positions AERB as the sector regulator, enhancing credibility and predictability.

Reform of Civil Nuclear Liability - A Breakthrough:

• Background - CLND Act:
  • Influenced by the Bhopal gas tragedy, the Civil Liability for Nuclear Damage (CLND) Act (2010) allowed operator recourse against suppliers for defective equipment/services.
  • This deviated from global norms under the Convention on Supplementary Compensation (CSC), creating a major deterrent for US, French and Japanese OEMs (Kovvada, Jaitapur stalled).
• Changes under SHANTI Act:
  • Operator recourse against suppliers allowed only when explicitly provided in contract, or in cases of intentional acts to cause nuclear damage.
  • It aligns India with international nuclear liability architecture, enhancing investor confidence and supplier participation.
• Remaining gap:
  • No statutory definition of “supplier”.
  • Earlier proposals suggested categorising manufacturers of systems/components, designers providing specifications, and quality assurance/design service providers.
  • Lack of clarity leaves residual liability uncertainty in the supply chain.

Regulatory and Institutional Concerns:

• Ambiguity in key terms:
  • Undefined terms include -
    • “Sensitive” activities (non-patentable),
    • “National security implications” (may bypass AERB),
    • “Strategic” activities (may trigger separate regulators).
• Risk -
• Start-ups, especially in SMRs, may face expropriation of IP.
• Could deter R&D investment and innovation.
• Multiple regulators (Section 25):
  • Allows creation of additional regulatory bodies for “strategic” activities. Open-ended provision creates regulatory uncertainty.
  • Need: Clearly defined circumstances in rules, or procedural safeguards before jurisdiction shifts.
• Independence of AERB:
  • AERB member selection committee constituted by the Atomic Energy Commission (DAE).
  • Best practices (e.g., Financial Sector Legislative Reform Commission [FSLRC] model) suggest independent experts, retired judges, and limited executive dominance.
  • Section 17(5) allows rules to strengthen structural independence while safeguarding national security.

Pricing of Nuclear Power - A Major Policy Challenge:

• Section 37 - Centralised tariff control: It vests pricing authority for nuclear electricity in the central government, overriding the Electricity Act, 2003.
• Issues with administered pricing:
  • Electricity is fungible — no justification for treating nuclear power differently.
  • The Electricity Act ecosystem supports tariff discovery, open access, power exchanges, and captive generation.
  • Nuclear power’s high cost makes mandatory procurement burdensome for financially stressed DISCOMs.

Way Forward - Market-Based Nuclear Expansion:

• Enable private-to-private transactions: Encourage captive nuclear generation, natural buyers (data centres, industrial clusters, SEZs, GCCs, power-intensive commercial consumers), and SMRs (ideal for 24×7 clean baseload demand).
• Learn from renewable energy models: For example, in offshore wind proposals, generators find their own C&I (commercial and industrial) buyers. Similar models can drive scalable nuclear adoption.
• Reform Section 37:
  • Legislative amendment: To remove administered pricing.
  • Alternative: Exempt private-to-private contracts via notification. Retain tariff control only for PSUs and DISCOM-linked transactions. Ensure non-discriminatory grid access. 

Conclusion:

• The SHANTI Act is a landmark reform.
• However, clarity in regulatory scope, market-driven tariff mechanisms, etc., will determine whether India can truly harness nuclear power for clean energy transition, energy security, and industrial growth.
• The success of this reform lies not just in legislation, but in its implementation architecture.